Valued at over $1.2 billion, Toss is Korea’s first fintech unicorn

Billion dollar baby.
Billion dollar baby.
Image: Toss
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It’s taken a while, but South Korea now has a fintech unicorn.

Viva Republica, the parent of the financial services platform Toss, announced on Monday (Dec. 10) that it has closed an $80 million funding round that values the firm at $1.2 billion.

Toss was rolled out in 2015 as a peer-to-peer (P2P) payments service by Lee Seung-gun, a former dentist who switched professions to try his luck building internet companies eight years ago. Although it initially faced resistance from Korea’s banking regulator, limiting it to only 600,000 downloads in the first year, Toss has grown dramatically since.

With more than 25 services on offer, including loan accounts, credit score management, and customized insurance plans, Toss now has 10 million registered users in a country of 51 million people. Lee estimated earlier this year that by the end of 2018, 10% of all P2P online money transfers in Korea’s banking system will go through Toss, putting it at par with the country’s biggest banks.

The latest funding round was led by Kleiner Perkins and Ribbit Capital, both Silicon Valley venture capital firms making their debut in the Korean market.

Kleiner Perkins, known for its early bets on the likes of Google and Amazon, reckons there is a massive shift underway in consumer-facing financial services away from brick-and-mortar branch networks. “Toss’s emergence in South Korea is exemplary of this thesis, and we expect continued innovation from the company (and the fintech category as a whole) as new products/services allow consumers to gain control over their financial lives,” Noah Knauf, general partner at Kleiner Perkins, told Quartz.

South Korea is one of the most wired places on the planet—with almost universal internet access and very high smartphone penetration—and its per capita GDP has been forecast to exceed $30,000 in 2018. But tight financial regulations held back Korea’s fintech sector, even as other Asian economies, led by China, steamed ahead. The situation is now changing.

“With a large, youthful and incredibly tech-savvy population, the potential of Korea is enormous. Financial institutions in the country generate close to $500 billion in annual revenues almost entirely offline, and the advent of digital financial services is just getting started,” said Nikolay Kostov, a partner at Ribbit Capital, which is purely focused on the fintech industry and backs firms including digital currency exchange Coinbase, personal finance service Credit Karma and investing app Robinhood.

Since regulations eased up around 2015, Toss has led the pack of upstarts that have attempted to disrupt Korea’s banking industry, aggressively taking on traditional incumbents. In the process, the company has raised nearly $200 million (including the latest round) from investors including Singapore’s GIC, Sequoia China and PayPal. Earlier this year, Lee told Quartz that he was looking to raise around $100 million in 2019.

Part of its cash will be funneled into powering Toss’s expansion within Korea, including a securities brokerage business. There are also plans to expand into Southeast Asia, particularly Vietnam.

“By the end of next year, we are pretty sure we’ll be able to grab most of the Korean users who have a willingness to use fintech services. And at that point, we may hit the saturation point,” Lee said in an interview in October. “So we’ll need to go beyond the Korean market.”

Now Toss has the money to start plotting the big moves.